Banks that own broker-dealers need to hold more capital to withstand runs and other shocks, the head of the Federal Reserve Bank of Boston said Wednesday.

Eric Rosengren, president of the regional Fed bank, joined the calls of other central bank officials who have argued that the risks of short-term wholesale funding need to be addressed. Broker-dealers' reliance on unstable, short-term funding – particularly repurchase agreements – leaves them exposed to runs and credit-market freeze-ups, he said.

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